Wednesday, March 17, 2010

The online business model

Online businesses have the gift of extreme potential. As Anderson says in 'The Long Tail' one of the best qualities of the web is that online markets can offer anything, as they are no longer constrained by physical space. Not only can the web offer anything, but offering anything for free is becoming increasingly possible.

In connecting 'The Long Tail' to the music industry, we will start to see less 'filler' tracks and more substance. Why? Tracks are being evaluated individually on their own merit. The benefit of paying per track is that consumers no longer have to pay for tracks they would skip over on the cd. And rather than solely hit songs being profitable, the 'misses' or what's on the long tail will also see profit. It's not just about the grossly profitable anymore, mildly profitable is still profit.

Amazon was used as an example by Anderson and by the bubble video because what Amazon did is create the ability to buy any book, not just the bestsellers. Now, without the constraint of physical bookstore space, anything is possible. Also, search terms and suggestions mean convenience.

Although Rhapsody was cited as a good example of music's success because of the long tail, I believe that it will eventually fail because of the free concept. There are sites like pandora that offer the same thing, without a monthly fee. Good luck Rhapsody.

As John said in the end of the video, the dotcom bubble and bust was terrible for some investors. However, sites like amazon and ebay are relevant today because of survival of the fittest. I believe that sites like these two will continue to survive because they both do something so well: put the power into the hands of the consumer.